By Joy Wiltermuth and Mark DeCambre
“Wednesday’s still elevated consumer-price index marks about six months worth of hot inflation data, suggesting that inflation is not as transitory as many investors previously expected,” wrote Nancy Davis, founder of Quadratic Capital Management, in emailed comments on Wednesday.
Corporations have been increasingly mentioning the impact of pricing pressures on earnings updates and investors have been eagerly listening for guidance from C-suite executives on the outlook for inflation.
JPMorgan Chase /zigman2/quotes/205971034/composite JPM +2.68% results were better than Wall Street forecasts on earnings per share as it released another $2.1 billion of loan loss reserves. Its shares, however, fell 2.6%.
On the flip side, if other major banks release loan loss reserves, that’s a bullish sign about the health of the U.S. economy, Wicker said.
“I think the pattern has been signaling the coast is pretty clear,” he said. “We really didn’t experience the kind of loan losses that a year-and-a-half ago we had to prepare for.”
Read: Will bank stocks’ wild rally continue? Here are the numbers to watch in this week’s earnings
Analysts expect S&P 500 index earnings to rise 27.6% annually, a pace markedly slower than a 52.8% gain in the first quarter and 92.4% in the second quarter, which both benefited from favorable comparisons with the start of the COVID-19 pandemic last year. Bank of America has warned that guidance from companies could be ugly amid a “make or break quarter.”
Opinion: Beating the market would still be tough even if you knew the S&P 500’s earnings before everyone else
Despite Wednesday’s inflation data, Davis said Fed officials were unlikely to change their views on tapering, with it likely ending purchases by the middle of 2022 as it gears up to eventually normalize interest rates.
“The Fed is already expected to announce its tapering plans and the central bank likely wants to preserve optionality with their hiking cycle, Quadratic’s Davis said.
Which companies were in focus?
-
Shares of tech giant Apple AAPL fell 0.4% after Bloomberg reported late Tu esday that the tech giant will cut iPhone 13 production due to global chip supply shortages.
-
Shares of Qualcomm Inc. /zigman2/quotes/206679220/composite QCOM +1.63% rose 1.7% after the chip maker said its board had authorized $10 billion in share repurchases .
-
Shares of Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL +2.26% skidded 5.8% after the air carrier reported its first adjusted profit since the COVID-19 pandemic, but said the recent rise in fuel prices will pressure its ability to stay profitable in the fourth quarter.
-
BlackRock BLK shares climbed 3.8% after the investment giant reported beats on both profit and revenue expectations , and more than 20% growth on assets under management.
How did other assets trade?
-
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.21% , a measure of the currency against a basket of six major rivals, fell 0.5%.
-
U.S. oil futures lost steam, with the benchmark /zigman2/quotes/209723049/delayed CL00 -0.83% closing 0.3% to settle at $80.44 a barrel. Gold futures /zigman2/quotes/210034565/delayed GC00 +0.34% closed 2% higher to settle at $1,794.70 an ounce.
-
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.30% closed 0.7% higher, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.16% gained 0.2%.
-
The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.31% rose 0.4%, while Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +1.93% lost 0.3%.
Barbara Kollmeyer contributed reporting
Add to watchlist
JPM
Add to watchlist
QCOM
Add to watchlist
DAL
Add to watchlist
DXY
Add to watchlist
CN:SHCOMP
